Hawaiian Electric Industries, Inc.

Good afternoon. Thank you for attending today's Q1 2023 Hawaiian Electric Industries Inc. Earnings Conference Call. My name is Alexis, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to Mateo Garcia, Director of Investor Relations. You may proceed.

Thank you, Alexis. Welcome everyone to HEI's first quarter 2023 earnings call. Joining me today are Scott Siu, HEI President and CEO, Paul Ito, HEI CFO, Shelly Kimura, Hawaiian Electric President and CEO, Ann Teranishi, American Savings Bank President and CEO, and other members of senior management. Our earnings release and our presentation for this call are available in the investor relations section of our website. As a reminder, forward-looking statements will be made on today's call. Factors that could cause actual results to differ materially from expectations can be found in our presentation, our SEC filings, and in the investor relations section of our website. Now, Scott will begin with his remarks.

Aloha kakou. Greetings, everyone. Thank you for joining us today. I'll give an overview of our results, update you on our businesses and the Hawaii economy, and then turned the call over to Paul to further discuss our financial results and guidance. Our combination of businesses continued to deliver solid results in the first quarter. ASB's low-risk community banking model, supported by a strong, primarily retail deposit franchise, showed its resilience. And with 86% of deposits from our retail customers and 85% of total deposits FDIC insured or fully collateralized, ASB is a very different bank than the banks that have experienced challenges in recent months. The utility continues to show its ability to deliver consistent performance under performance-based regulation, or PBR, and operate efficiently to deliver earnings growth. Our consolidated first quarter earnings of $54.7 million and earnings per share of 50 cents reflect strong execution from across our enterprise. The utility executed well, growing net income to $47 million, despite elevated costs from storms during the quarter. And ASB grew net income over the fourth quarter of last year, generating net income of $18.6 million. As a reminder, last year's first quarter results included a $0.06 per share gain on sale in the holding company and other segments. Turning to the utility, We continue to progress key initiatives to integrate more renewables while improving the reliability and resilience of our grids. In late March, we filed our draft Integrated Grid Plan, or IGP, which proposes a clear plan forward to meeting our state's clean energy goals while prioritizing reliability and affordability. The draft IGP identifies four key objectives within the next five years. including stabilizing utility rates and advancing energy equity, growing the marketplace for customer scale and large scale renewables, creating a modern and resilient grid, and securing reliability through diverse energy sources and technologies. Our IGP is crucial to achieving our state's clean energy goals of net zero carbon emissions and 100% by 2045. Our Stage 3 RFP has continued to progress as planned. Bids were submitted in April, and the utility has bid in for firm renewable generation, consistent with the reliability requirements under the competitive bid framework. The RFPs are seeking a total of over 1,700 gigawatt hours of energy annually and between 600 and 800 megawatts of firm renewable capacity. Bid award notifications for Hawaii Island Oahu and the variable and storage components of Maui's RFP are expected in late October. We are continuing to connect renewable projects and the infrastructure required to deploy renewables reliably and efficiently to our grids. Last month, we placed in service a 30 megawatt solar project that includes 120 megawatt hours of storage on Hawaii Island. We also now have a quarter million smart meters deployed. servicing over 50% of our customers. These meters help us to integrate more renewables and to get distributed energy resources connected to our system faster, while providing data that helps us operate our grid more efficiently. We also plan to connect the 185 megawatt Kapolei Energy Storage project to our grid this summer. The project will provide load shifting and fast frequency response services enhancing grid reliability as we continue accelerating the integration of renewable energy. Turning to the bank on slide four. ASB remains well positioned, operating in Hawaii's unique banking market, which is characterized by loyal customers, a healthy economy, and stable real estate values. Our depositor base, 86% of which comprises retail deposits, has remained a steady source of funding during the quarter, with no unusual changes to customer behavior as a result of challenges elsewhere in the banking industry. ASB remains a consistent contributor to earnings and cash flow, and during the quarter paid HEI $14 million of dividends. We continue to see positive trends in credit quality, and our high-quality loan book, most of which is real estate secured, saw a continuation of historically low delinquency rates and net charge-offs, and overall solid condition of our borrowers during the quarter. ASB's unique banking market, strong liquidity and capital ratios, and high-quality retail deposit base give us confidence we are well-positioned to continue delivering solid financial results. Turning to the economy on slide five, Hawaii's economy continues to show strength across key indicators, and the University of Hawaii Economic Research Organization, which provides regular forecasts of our state's economy, is still projecting growth in Hawaii in 2023, driven by a continued recovery of tourism and expected strong military construction spending. Hawaii's unemployment rate was 3.5% in March, an improvement from 3.6% in February, and in line with the national average. As a reminder, unemployment here has fared comparatively well during downturns and performed better than the national average during the financial crisis. Visitor arrivals are near pre-pandemic levels. In March, about 901,000 visitors arrived in Hawaii, an increase of 14% from last year and a 97% recovery from March 2019. international arrivals nearly doubled compared to last year in March, with Japanese arrivals increasing tenfold. Notably, visitor spending has been very strong, and in March was up over 20% compared to last year, and up over 23% compared to pre-pandemic levels. Hawaii's housing market has also been resilient, and while sales volumes are lower given high mortgage rates, median prices at about $1 million in April are still hovering near record highs. I'll now hand the call over to Paul to further discuss our financial results and outlook.